Examples of organisations acting without integrity or purpose are unfortunately available in spades. The Banking Royal commission uncovered a business model among many financial institutions which de-prioritised or even exploited customers. It was recently discovered that Crown Casino in Sydney has turned a blind eye to the imprisonment of employees in China and money laundering by criminals through Crown accounts in Melbourne and Perth.
In both cases, the pursuit of the owners and shareholders’ self-interest and disregard for the interests of customers, employees and the community ultimately led to their downfall. It’s no longer acceptable in the current environment to operate without purpose or integrity. And those that do will be quickly found out.
What’s changed?
Historically, an organisation was seen to have competing interests; between owners, employees and customers. Lower prices are good for customers but mean less money for owners. Higher wages are good for employees but again are bad for owners. Owners’ preferences were to drive down wages, increase prices and pay better dividends to shareholders in direct competition with the interests of employees and customers. This model is fast losing traction.
Society now understands that the interests of owners and shareholders don’t always need to be at odds with those of customers, employees or the community in order for businesses to thrive. Engaged employees who are fairly remunerated perform far better and contribute more fully to the business’ success. Customers who have an excellent customer experience and feel they’re getting value for money can be strong advocates for a brand, contributing to its success.
On the flipside, society is much more likely to shine a spotlight on poor business practices and the pursuit of owners and shareholders’ self-interest above all else. Customers, employees and the community can hold organisations to account much more readily thanks to social media or through choosing to spend their money elsewhere.
A mutually beneficial engagement between all stakeholders can maximise everyone’s interests, without sacrificing a business’ success or profitability.
What’s the role of purpose and values?
The old view was that the only purpose a business had was to pursue the self-interest of owners and shareholders. With this view no longer considered acceptable, businesses need to be guided by a higher purpose.
The purpose as expressed by leaders is critical. This is what all stakeholders can buy into. An owner who says “I’m just here for the money” sets him or herself up against the interests of employees, customers and possibly society. But an owner who says, “I am here for a higher purpose” invites those other stakeholders to buy into and align with that higher purpose. This is particularly true for employees, who won’t be motivated by the pursuit of profit. By aligning owners and employees around a higher purpose there can be a deeper engagement ultimately for the benefit of all stakeholders.
This is not to say it’s not appropriate for owners to be profit maximisers. They need to be in any competitive environment. It’s just that that discussion needs to be kept among owners.
That statement of purpose should be focused on the customer and/or society, without sacrificing the primary benefit to owners and employees. It should be clear, concise and engaging.
An example is Owen Hodge Lawyers’ purpose – We believe in being different. Our passion is to provide our clients with clarity, direction and security. This purpose is client focussed, expresses what makes us different while making a commitment to mutually beneficial outcomes.
The next part of the equation is to manage the hearts and minds of owners and employees through agreed values. By encouraging stakeholders to agree to behave according to an agreed set of values the organisation can push towards its stated purpose and achieve maximum benefit for all stakeholders.
In the case of Owen Hodge Lawyers, our values are integrity, empowerment and excellence. These values guide our behaviour towards achieving our shared purpose.
By focusing the minds and behaviour of owners and employees on the shared purpose and values it will enable different behaviours to the betterment of the business, customers, employees and society.
